IP Law Daily, TRADE SECRETS—N.C. Super.: Court denies ex-employee’s motion to dismiss misappropriation of trade secrets suit, (Mar 9, 2026)

By Jonathan Anderson

Although the employer may need to present further evidence at a later stage of the litigation, the court was satisfied with the sufficiency of the complaint.

A state trial court in North Carolina denied a former employee’s motion to dismiss a lawsuit alleging that the former employee misappropriated trade secrets to start a competing business. The suit alleges breach of contract, violations of the North Carolina Trade Secrets Protection Act, unfair and deceptive trade practices, and conversion. The former employee asserted various deficiencies in the complaint and argued that certain claims were barred by lack of consideration, expiration, or terms of the employment agreement. However, the court allowed the suit to proceed (Jekson USA, Inc. v. White, No. 2026 NCBC 18 (N.C. Super. Mar. 4, 2026)).

Background. On July 21, 2025, Jekson USA, Inc. filed a lawsuit in Franklin County Superior Court against James Edward White alleging breach of contract, violations of the North Carolina Trade Secrets Protection Act, unfair and deceptive trade practices, and conversion. Jekson, which produces systems to inspect and track products during manufacturing, hired White as director of mechanical engineering and plant manager for a facility in Youngsville, North Carolina. The complaint alleges that White took a physical rendering of a tray loading design from Jekson’s facility to a 3D scanning vendor so he could copy the design. He resigned from the company the following day. The complaint alleges that days later, White formed a company that competes directly with Jekson in the marketplace for tray loading and inspection systems. White moved to dismiss the complaint.

Breach of contract. White advanced four arguments against the breach-of-contract claim, which the court declined to dismiss.

Lack of consideration. First, White argued that a non-competition provision in his employment agreement is unenforceable for lack of consideration because the agreement was executed 14 days after he began working for Jekson, and that the provision of new consideration was required to make the agreement a legally effective contract. Jeckson contends that the parties agreed to the non-compete clause when White’s employment began. The court observed that North Carolina courts have held no new consideration is required where the parties agreed to a non-competition restriction at the time the employment relationship started, even if the agreement was not reduced to writing until later. The court held it would be premature to dismiss this claim at the pleadings stage to give Jeckson the opportunity to prove through admissible evidence that the parties agreed to the non-compete clause when White’s employment began.

Expiration. Second, White argued that the non-compete clause expired because the employment agreement provided only for a three-year term of employment. In White’s view, the non-compete requirement ended once White worked for Jeckson for three years. The court found the relevant language ambiguous but said even if White’s employment was intended to last three years, his status as an employee lapsed into an at-will arrangement and that there is no language in the agreement stating the non-compete clause would expire after three years. To the contrary, the court said, the language of the agreement extended the non-compete requirement during White’s employment and “for a period of One (1) year thereafter the Employee’s termination.”

Termination vs. resignation. Third, White argued that the non-compete clause could be triggered only if his employment had ended by termination rather than his resignation, citing the word “termination” in the clause. However, the court observed that North Carolina appellate courts have addressed the same argument and held that such ambiguity could not be resolved at the pleadings stage.

Breach allegation. Fourth, White argued that the complaint fails to allege how he breached the agreement. The court said it was satisfied that Jekson’s allegations are sufficient to survive the motion to dismiss.

Misappropriation of trade secrets. The court denied White’s motion to dismiss the misappropriation of trade secrets claim under the North Carolina Trade Secrets Protection Act. White argued that the complaint fails to allege with requisite specificity the trade secrets at issue and the acts of misappropriation. The court rejected this argument, finding that the allegations in the complaint easily satisfy the misappropriation element.

Conversion. The court denied White’s motion to dismiss the conversation claim. White argued this claim fails because the complaint does not allege that he refused a demand from Jekson that he return its property. However, the court held that such a requirement is necessary only when the defendant lawfully came into possession of the converted items. The complaint alleges that White took an ammunition tray prototype without permission and did not return it. As such, the court said Jekson was not required to plead demand and refusal.

Unfair and deceptive trade practices. The court denied White’s motion to dismiss the claim alleging unfair and deceptive trade practices (UDTP), with White arguing that Jekson failed to plead a valid claim. However, the court said because it has allowed Jekson’s claims for misappropriation of trade secrets and conversion to go forward, such claims are sufficient to serve as predicates for the UDTP claim.

The Case is No. 2026 NCBC 18.

Judge: Davis, M.

Attorneys: Matthew Joseph Gorga, Nathaniel Pencook and Phillip J. Strach (Nelson Mullins Riley & Scarborough, LLP) for Jekson USA, Inc. Jack Ayers and James M. Ayers (Ayers & Haidt, P.A.) for James Edward White.

Companies: Jekson USA, Inc.

Cases: TradeSecrets NorthCarolinaNews GCNNews